Obama's speech

Friday

Feb 27, 2009 at 12:01 AMFeb 27, 2009 at 1:00 PM

Henry J. Waters III

At the height of the worst economic crisis since the Great Depression, President Barack Obama spoke to a joint session of Congress and the world, promising a better day and applying pressure. There was plenty to please progressive Democrats and an occasional moment for conservative Republicans.

Louisiana Gov. Bobby Jindal gave the Republican response, a tepid performance that did not reflect his talents very well. In stark contrast to Obama’s approach, he argued for a less-intrusive government, a philosophy worth keeping in the conversation even as we embark on unprecedented government activity.

Obama made a bold speech sending the general message that our economic situation is so harsh that nothing less than a major response from the federal government will do. He pushed Congress to spend trillions of dollars and impose serious new regulations on financial institutions. Masked in his spending plans are fundamental changes in the role of government, to enable “universal” access to higher education and health care, and development of renewable energy sources to replace oil.

He promised much more than the government can deliver and, indeed, much more than it should deliver, but a speech like Obama’s can only set directions, not achievable goals. Presidents propose government spending policy. Final enactment is up to Congress. This Congress will decide to spend trillions on “stumulus,” but it won’t establish universal health care, education or the end of fossil fuel use.

On education, the largest sustained applause came when he said the main stimulus for learning must come from the home, otherwise all the tuition subsidies in the world won’t make a fundamental difference. Any person with adequate motivation and preparation can get a higher education today. No such applicant is turned away for lack of personal means.

On energy, the president mentioned today’s politically popular alternatives, but curiously, he included “clean” coal but not nuclear power. He did not mention domestic production of more oil, which for the foreseeable future is bound to offer a more effective alternative to foreign oil than any of the fledgling renewable sources usually touted. Development of those alternative technologies should continue, but they are not feasible substitutes for oil, coal and nuclear power. In speeches, politicians can count on windmills and solar panels to bring a standing O. Fair enough, but deliver us from aggressive laws mandating excessive market share for economically unsustainable sources.

On health care, the president said providing universal coverage will save money, a misnomer for the foreseeable future. Universal care is a valid goal, but unless the program substantially reduces the overall level of care, it won’t reduce costs. The primary hurdle is finding a way to subsidize care for the millions now without coverage. Either it will take vast new spending or a substantial reduction in reimbursement levels for hospitals and caregivers, both formidable political challenges. A well-designed full-coverage program can be delivered more efficiently, but it’s too much to simply promise sure cost savings as Obama did.

He couched all his spending proposals with a strong promise to evaluate every teeny outlay, making sure not a dime is wasted. He meant it, but what politician has ever said otherwise? And the torrent of spending he is unleashing is beyond precise control. With larger government comes more waste and more disagreement on spending priorities. Take that to the bank.

On Tuesday, Obama’s goal was largely to instill hope. He spoke well and preserved his leadership image. At a time when most people think somebody should do something, the president promised to marshal the gigantic forces of the federal government.

The core of his push is to restore lending by the financial sector, but this requires more than propping up banks and giving subsidies to home owners. Housing market supply and demand will have to balance, then borrowers will re-enter the market and banks will have customers for their loans. This tipping point might be closer than we realize.

Maybe the most government can do is provide welfare help and build public infrastructure while this rebalancing occurs. The quicker that happens, the sooner we will reach the end of the tunnel. Whether all this frantic government activity will hasten the day is questionable.